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Economic theory is capable of explaining the development and persistence of social conventions, such as conventions of cooperation, in the face of circumstances characterised by the Prisoners’ Dilemma. Such conventions can arise either because of labelling and the iterated nature of the playing of the game or because of related overlapping activities. A social convention becomes a social norm or custom when it acquires moral forces such as guilt and resentment at its violation. Consider the following example. I am in line for a ticket for the next train from my local station. The other people in the queue are hoping to catch the same train, the departure of which is imminent. The local social convention is one of respecting the order of arrival in the queue, but late-comers to the line have an incentive to jump the queue. If the queue breaks up into a melee, then the resulting crush around the ticket booth causes delay and implies that fewer people will catch the train. Do I jump line? If this is a repeated game played every day by the same people, then I'm likely to stay in line: in the longer run I have a vested interest in the survival of the social convention. However, if then I'm abroad on holiday and find myself in exactly the same position but amongst strangers whom I will never expect to meet again, will I respect equally their local social convention of respecting the order of the queue? If I'm narrowly rational I will not. But if for me the social convention which I recognise and respect at home five days a week has acquired some moral force, then I will feel too guilty to break out of line and consequently I will risk missing my train. The social convention has become a social norm or custom which I follow because of my experience and my socio-psychological characteristics against my narrowly rational judgement. In this thesis we shall be developing a model in which agents' actions are influenced by the utility they derive from two related sources. The first is the utility derived from conforming with the behaviour of others. We shall refer to this as solidarity-derived utility. The second is the utility gained from obeying a social norm or custom (or the disutility suffered from breaking that custom). We take the existence of the social custom as given. This is why we distinguish between a social convention which is derivable from the postulates of rationality and a social custom which we treat as given (as are preferences) by non-rational information. This is discussed more fully in Chapter 2. Thereafter our chief concern is to integrate the treatment of social customs into more mainstream economic analysis. Our main focus is on the question of what our analysis contributes to the economic theory of the trade union. There are a number of reasons for the choice of this context as the medium for discussion of the model. First, union membership is a classic example of a collective action in which the public good provided is characterised by nonexclusion. Second, empirical evidence points to the widespread existence of the union open shop in which membership is not compulsory. Third, survey and other evidence suggests the relevance of social custom forces as determinants of union membership by individuals. Fourth, union membership is an important topic in its own right, especially in the light of quite dramatic changes in aggregate union density in the UK and elsewhere, and yet not one satisfactorily addressed in the theoretical literature on trade unions. Finally, union membership is likely to be an important influence on labour market outcomes and therefore on macroeconomic performance.